Correlation Between Asbury Automotive and Trupanion
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Trupanion at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Asbury Automotive and Trupanion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asbury Automotive Group and Trupanion, you can compare the effects of market volatilities on Asbury Automotive and Trupanion and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Asbury Automotive with a short position of Trupanion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Trupanion.
Diversification Opportunities for Asbury Automotive and Trupanion
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asbury and Trupanion is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion and Asbury Automotive is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Asbury Automotive Group are associated (or correlated) with Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Trupanion go up and down completely randomly.
Pair Corralation between Asbury Automotive and Trupanion
Considering the 90-day investment horizon Asbury Automotive Group is expected to under-perform the Trupanion. But the stock apears to be less risky and, when comparing its historical volatility, Asbury Automotive Group is 1.88 times less risky than Trupanion. The stock trades about -0.09 of its potential returns per unit of risk. The Trupanion is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,241 in Trupanion on September 12, 2024 and sell it today you would earn a total of 158.00 from holding Trupanion or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Trupanion
Performance |
| Timeline |
| Asbury Automotive |
| Trupanion |
Asbury Automotive and Trupanion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Trupanion
The main advantage of trading using opposite Asbury Automotive and Trupanion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Trupanion can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Trupanion will offset losses from the drop in Trupanion's long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Trupanion vs. First American | Trupanion vs. Assurant | Trupanion vs. NMI Holdings | Trupanion vs. MGIC Investment Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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